October 5, 2023

US cattle herd continues to decline

The latest Cattle on Feed Report has revealed that the US beef herd is still experiencing a reduction in numbers, continuing a long-term trend that has persisted for over four years.

Kevin Good, vice president of Industry Relations for CattleFax, highlights that this decline is primarily attributed to persistent drought conditions.

According to Good, the cattle on feed numbers have dropped by 2% compared to the previous year, with August placements decreasing by 5%. These figures align with industry expectations.

He said that the ongoing liquidation of the US beef cow herd has led to smaller supplies of feeder cattle and calves available for placement. This trend is expected to persist for at least another one or two years, resulting in tighter supplies for the industry.

The central factor behind this contraction is drought. Despite higher cattle prices over the past 18 months, which should have encouraged herd expansion, the availability of sufficient feed has been a significant obstacle. The cattle industry experienced a three-year drought cycle, which was temporarily broken earlier this year. However, dry conditions have returned, particularly in Texas, a major beef cow state, where 15% of the country's beef cow herd resides. Dry pockets in Kansas, Nebraska, and Missouri, all significant cattle-producing states, have also contributed to the extended period of liquidation.

In addition to drought, the beef industry faces other challenges, including the cost of capital and interest rates, labour availability and costs, urban sprawl, and the age of producers. These factors are considered major headwinds affecting the industry.

Good points out that signs of herd expansion are beginning to emerge in regions with improved moisture conditions, particularly in the northern plains and the western US. In these areas, a higher percentage of females, particularly heifers, are being retained, signalling the initial stages of expansion.

A more substantial portion of the country needs to experience improved moisture conditions before a significant reversal of the trend can occur. Good said that there are already geographical areas where expansion is underway due to the combination of a robust calf market and adequate feed supplies.

-      KMA Land